"Hi mate, Will you please share ideas how to identify slow mover from inventory items? I need criteria and approach to identify fast mover, slow mover, and non_mover stock items? Not sure how slow is slow and how fast is fast in inventory ? We are in business with industrial material, graphic materials, exhinition systems, alumina materials. Thank for help in advances. Jon"

Sorry buddy, actually I am asking the SAP""s report or something. I want to know from inventory management point of view, how to identify slow mover, fast mover, non movers. The definition, the principle, the approaches, the theory. Their characteristics. Rather than Sap itself. Hope it is clear. Here. Thanks friend to show me reports in SAP. Thanks. Jon

Hi,
Dear use mc50. This os is used to see ded stock or moving stock in %.

VKMishra
09557790914
ACPPLUK

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Vidhya Dhar

March 26, 2011 12:17 AM

Hi

If I were you, I would try the following:

I would collect the following data for each inventory item on an annual
basis.

a. average monthly/ weekly consumption (AMC / AWC) in terms of quantity
(SKU : Stock keeping unit) and consumption value (in monetary terms). I
would also ascertain average procurement and process lead times of such
items, as necesssary.

c. a pattern of deviation from the AMC / AWC and the parameters affecting
them ( I would use statistical tools such as standard deviation etc.) to
ascertain such abnormalities ). I would do the same thing with items which
do not always adhere to standard / pre-defined procurement and process lead
times, as necessary.

c. I would collect details of the last date of issue of each inventory item
during the past year

I would shortlist all items into groups / bands ( items which were not
issued during the last three months, last six months, last one year etc, as
needed).

This process would create a smaller list of items which are slow / non
movers.

I would now rearrange the list into A B C items using the Pareto curve
analysis (sing annual consumption value in monetary terms) and identify
critical items.

Now you have a list of items which are slow and non-movers in terms of
importance ( based on monetary value of annual consumption). This list can
be used for further analysis ( corrective and preventive action, as
necessary) and for reporting purposes.

Hi mate, thanks you for your help and explaining to me your ideas. As you mentioned that(1)what do i do when i have a pattern of deviation from amc/awc and how to deal with it?(2) when i have shortlisted items with last issues in past 3 months, past 6 months, past 12 months, how does these groups tell and identify slow movers? I am thinking slow movers have low qty issues per week or month and or even per transaction and low number of issues annually. What do you think? Hope share ur ideas again. Thanks jon

Hi. Mate, actually i want to know how could i identify these items are slow mover by what kind of criteria? And how do you know these items are slow movers? Thanks mate, jon

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Vidhya Dhar

March 26, 2011 10:17 AM

Hi Jon

The last date of issue being very old as of date ( viz. the date of review )
gives an indicator of for how long the item has not been moving. You could
possibly set your own parameters ( based on industry standards .... the lead
time and usage pattern are helpful in this regard.....standard deviation
give you allowances and help you study industry specific and seasonal
variations and assign reasons ...actually this helps you re-fix reorder
levels and re order quantities to reduce the recurrence of slow and non
movers in future )

Let us assume you are reviewing on 31 Dec 2010

One possibility is :

Stocks are available and last date of issue is prior to 01 July 2010. I
could categorize this as a slow mover.

Stocks are available and last date of issue is prior to 01 January 2010. I
could categorize this as a non-mover mover.

Stocks are available and last date of issue is prior to 01 July 2009. I
could possibly categorize this as a dead stock.

I would attach top priority to large stock closing balances of such items in
terms of value ( and volume occupied by the stocks ). The ABC analysis helps
me make corrective and preventive decisions in this regard.

one issue to watch out for in the logic below is that it also identifies new parts as being slow moving (or even non moving) as there may be stock in the warehouse but no movements to date. So you need to include the logic of when the part was set up to eliminate new parts

Hi, mate, many thank again for your help in this. Now i have new questions to ask(1) for ABC analysis, what do we deal with stock items with less than 12 months sale/usage data? Normally we use 12 months past data to do ABC classification analysis. Any ideas?(2)do u also calculate standard deviation of demand during lead time and average demand during lead time? Question here is lead time is NOT fixted and NOT constant. How to deal with the dilimma? Thanks buddy, jon

Thanks mark. You are right. We should include the established date of stock code for caution. Could you also contribute how to identify slow mover, fast mover? Thanks jon

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Vidhya Dhar

March 27, 2011 12:00 AM

Hi

1. Include all items with stock balances for review and create a list
2. Filter out only those items where the last issue date was three months
older or so. This step eliminates current stock items (which are in use
during the recent three months).
3. Now you have a list of items with stock balances which are at least three
months old.
4. Regroup the list based on the last date of issue (into three groups as a.
last issue made three months ago, b.six months ago and c. last issue was
made in the previous year and there have no been issues thereafter).
5. This regrouped list furnishes a list of a. slow movers , b. non movers
and c. dead stocks.

The ABC analysis of consumption pattern of this final list does a further
regroup of such stock items in terms of monetary value and classifies them
into A , B and C stocks.

You ultimately get

1. slow movers which are in stock for more than three months ( A Class items
with lot of money tied up in stock balances, B class items with lesser money
invested and c class items which can be ignored but yet kept for future
watch).

2. Non movers which are in stock for more than six months ( A Class items
with lot of money tied up in stock balances, B class items with lesser money
invested and c class items which can be ignored but yet kept for future
watch).

3. Dead stocks which are in stock for more than one year ( A Class items
with lot of money tied up in stock balances, B class items with lesser money
invested and c class items with not monetary value).

These lists can be analyzed for corrective and preventive action.

Lead time analysis and Standard deviation are further analytical tools to
ensure that you refix reorder levels and min max values if these items are
possibly required in future also.

Thanks mate, appreciate your step by step guide, that helps me much. Last point, do u also calculate standard deviation of demand during lead time and average demand during lead time? Lead time is Not fixed. How to handle this in calculation? Pls advise jon

Thanks buddy for guiding me in much mlre deyails, appreciate it much. Last question to ask that do you calculate standard deviation of demand during lead time and average demand during lead time. Lead time is a Not fixed and Not constant figure. How to calculate these two? Do we use the average lead time or the normal longest lead time for simple calculation?please advise, thanks, jon

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Vidhya Dhar

March 27, 2011 01:18 PM

Computation of lead time and computation of standard deviation are just add
ons which help you in optimize levels by controlling the ordering quantity.
They are corrective and preventive actions to reduce future build up of non
movers and slow movers.

Dear mate, what happened if lead time distribution is Non~normal? Do you use normal distribution or have to try various distribution? Or draw histogram frequency to see its pattern of lead time then choose for example 80% time, leas time drop in xxxx weeks. What do you think? Sorry buddy to trouble you.

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Vidhya Dhar

March 28, 2011 12:01 AM

At the moment, I would suggest that you do not bother about lead time as it
does not have a direct impact on identifying dormant stocks. Study of lead
time matters only when you want to take remedial action to avert recurrence
of unwanted stock build up.

At the moment, please concentrate only on identifying slow and non movers
and that does not require lead time analysis.

Hi buddy, sorry to bother you again. Actually, I am working in multi~branch warehouses environments and also we have simple manufacturing process for rerolling, cutting etc simple process. My question here is that you mentioned LAST ISSUE DATE, do we also need to consider "" last consumption date for manufacturing"" and ""last stock transfer request date""? That both date also may be important. Do we need to take them into account, please advise, jon

Hi buddy, sorry to bother you again. Actually, I am working in multi~branch warehouses environments and also we have simple manufacturing process for rerolling, cutting etc simple process. My question here is that Mr V in his posts mentioned LAST ISSUE DATE, do we also need to consider "" last consumption date for manufacturing"" and ""last stock transfer request date""? That both date also may be important. Do we need to take them into account, please advise, jon

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Vidhya Dhar

March 30, 2011 08:52 PM

Hi

When I mean last issue date, I refer to any outflow of material that is
meant for consumption downstream (into work in process for items used for
manufacture / for sale if in retail trade ). Any material is bought for
consumption or for sale. You track the date of such outflow of material for
purposes of manufacture / sale as the case may be .

Thanks mate. I fully agree, but about stock transfer request? That sometimes lead to some confusion, as stock transferred to another warehouse would not be consumed soon and it may be used just for replenishment purpose. I am not quite sure of stock transfer. But I am thinking normal materials disbursements( one request for sale, One request for manufacturing and One request for stock transfer), all the three kinds could be considered as one hit respectively. Is that right? Please confirm.

Many thanks
Jon

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Vidhya Dhar

March 31, 2011 04:00 AM

Hi

If I were you, I would consider every kind of issue ( including stock
transfer requests complied with ). However, as an auditor, I would make a
separate and detailed analysis (an exception report) of frequent stock
transfers of the same items across plants / warehouses and not resulting in
value addition downstream in manufacture / sale , as the case may be. Such
transfers require careful scrutiny since frequent stock transfer of the same
items perhaps indicate inadequate procurement controls( logistically )
planning and ( or ) an abuse of stock transfers just to distort ageing of
dormant stocks.

Actually, I do not use SAP. I am here wanting to know how to identify sporadic usage stock item in practice? I need knowledge to figure out rather than report from system. Need to know how and why system does that way? Please advise if your know. Thanks buddy